The Impact of the AT&T-Time Warner Deal

AT&T’s plan to acquire Time Warner underscores the seismic shifts rippling through the media landscape. The $85 billion deal would pair the Dallas-based telecom giant with the fourth-largest media company in the country, giving AT&T a stable of high-quality TV channels and movies, including HBO, CNN, TNT, TBS, Cartoon Network and film company Warner Bros. AT&T’s wired broadband service and nationwide mobile network, tied with its recent acquisition of satellite television operator DirecTV, would give AT&T national distribution of all of Time Warner’s media properties. AT&T expects to finalize the deal by the end of 2017.

AT&T sees the deal as a way to jumpstart growth and fend off emerging competition. Vertical integration — owning the pipes along with the content that travels through them — is AT&T’s vision of making money in the shifting media landscape over the next decade or so. AT&T plans to incorporate advanced ad targeting of its 100 million-plus customers while gaining more subscriber dollars to video content. Advertising and media businesses spell faster growth and higher profit margins, with lower capital investment, compared to the business of building wired and wireless networks. AT&T envisions a future where it more closely resembles Facebook rather than a telephone company.

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